Share

Gold retreats as decision day in UK puts markets 'all on edge'

London - Gold dropped for a fourth day as investors prepared for Britain’s referendum on membership of the European Union, with voting set to start at 7 a.m. in the UK.

Bullion for immediate delivery lost as much as 0.4% to $1,260.69 an ounce, the lowest price since June 9, and traded at $1 265.23 at 6:40 a.m. in London. It fell 2.5% in the opening three days of the week.

The metal, which rallied to the highest since 2014 last week, has dropped amid speculation voters will keep the country in the EU, diminishing demand for a haven. While polls in the lead up to voting day have shown a tight race, bookmakers’ odds favour a 'Remain' victory, boosting the pound. Governments and central bankers have warned a vote for Brexit may spark turmoil.

"At this moment the markets are all on edge," Justin Smirk, senior economist at Westpac Banking Coporation, said by phone from Sydney.

"A 'Remain' vote is a clearly known scenario. If we get an exit, we are in for a period of volatility while people try and work out what that actually means."

A decision to leave may propel gold to $1 400 an ounce, while the opposite result would hurt prices that have been boosted this year by the US Federal Reserve standing pat on interest rates, according to Societe Generale.

Either result would lift bullion’s volatility, the bank said.

Final push

The final hours before balloting saw intense campaigning by both sides, following a pause last week after the murder of Labour Party lawmaker Jo Cox, a supporter of staying in the EU. The pound, which has tended to slide when the Leave campaign showed signs of momentum, extended gains to reach its highest level this year against the dollar.

While bullion prices have declined ahead of the referendum, holdings in gold-backed exchange-traded funds have kept expanding.

The assets were little changed at 1 904.3 metric tons on Wednesday after rising for 16 days to the highest level since October 2013, according to data compiled by Bloomberg.

In other metals, palladium lost 0.6% while silver and platinum were little changed.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.92
+0.1%
Rand - Pound
23.88
+0.1%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.32
+0.1%
Rand - Yen
0.13
+0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders